Iran Update, December 29, 2025

The Critical Threats Project (CTP) at the American Enterprise Institute and the Institute for the Study of War (ISW) publish the Iran Update, which provides insights into Iranian and Iranian-sponsored activities that undermine regional stability and threaten US forces and interests. CTP-ISW publishes the Iran Update daily.

Click here to see CTP and ISW’s interactive map of assessed control of terrain in Syria, and here to see CTP and ISW’s interactive map of Israeli ground operations. The Syria map is updated daily alongside the static Syria maps in this report. CTP-ISW ended daily maps of Israeli ground operations in February 2025.

Click here to see ISW-CTP's interactive map showing the total strikes in Iran during the Israel-Iran War, as well as an interactive timelapse showing the strikes day-by-day.

Small-scale protests demanding that the Iranian government address the devaluation of the Iranian rial and high inflation rates have continued for the second consecutive day in Tehran and Hamadan City, western Iran, on December 29, amid a rapid collapse of the Iranian currency since November 2025.[i] The value of the Iranian rial has deteriorated rapidly after November 2025, though its value has fallen for years due to sanctions and Iran’s general international isolation. Protests initially began in Tehran on December 28.[ii] Groups of less than roughly 100 civilians, who were reportedly Iranian ”businessmen,” marched from Lalezar Street toward the Imam Khomeini Square on December 29, demanding that the Iranian government intervene in the economy and address the high inflation rate and devaluation of the currency.  Iranian security forces halted and clashed with the protesters at the Istanbul intersection on December 29, according to Islamic Revolutionary Guards Corps (IRGC)-affiliated media and geolocated footage.[iii] Iranian security forces also launched tear gas and clashed with protesters on Boali Street in southern Hamedan City on December 29.[iv] A BBC Persian journalist reported that economic protests also occurred in Malard City, Tehran Province, and on Gheshm Island in the Persian Gulf, but did not provide footage of the protests at the time of this writing.[v] Tehran merchants announced that they will continue to protest on December 30.[vi] The protests come amid a drop in the value of the Iranian rial. The value of the Iranian rial reached 1,445,000 rials per one US dollar as of December 28, which marks its lowest value in 2025.[vii] The rial appreciated slightly to 1,371,000 rials to one US dollar on December 29, however.[viii]

Current economic-related protests come as the Iranian regime is deliberating on Iran’s 2026/27 Budget, which is set to increase taxes to relieve Iran’s budget deficit as state oil revenue decreases, but will put additional economic pressure on the Iranian people. Iranian President Masoud Pezeshkian defended his proposed budget in front of the Iranian Parliament’s budget oversight committee on December 28, in which Pezeshkian proposed a tax increase by 62 percent.[ix] This increase in the tax rate will worsen the economic challenges caused by inflation that are plaguing Iranians. Iranian outlets on December 28 and 29 criticized the budget for not adjusting salaries in accordance with the current 42.2 percent inflation rate.[x] The proposed 2025 budget reportedly reflects a decrease in dependency on oil revenue. Iranian oil revenue–its main source of government revenue–has dropped significantly, only meeting about 16 percent of the expected annual revenue in 2025, according to the parliamentary Budget and Planning Commission Deputy Chairman on November 6.[xi] Parliament’s budget oversight committee rejected Pezeshkian’s proposed 1405 March 2026 to March 2027 budget on December 29 and is set to provide feedback to Pezeshkian’s cabinet on December 30.[xii]

Iranian regime-affiliated media recognized the protesters' grievances as legitimate but warned that these protests could escalate into “unrest” or be exploited by Iran's adversaries. “Unrest” in this context presumably refers to anti-regime protests specifically, rather than protests over economic grievances.[xiii] IRGC-affiliated media acknowledged that Iranian merchants have been unable to pay rent for their shops due to the increase in the prices of imports and basic goods and drop in their sales, and even called on the government to take these economic protests seriously.[xiv] The regime’s anxieties over these protests spiraling out of control and escalating into anti-regime protests are valid because previous economic protests have escalated into nationwide anti-regime protests in 2017 and 2018.[xv] Iranian regime-affiliated outlets also warned that these could be exploited by Iranian adversaries, namely Israel.[xvi] The Iranian regime has repeatedly blamed Israel and the United States for anti-regime protests over the past decade.[xvii] The IRGC published an official statement on December 29, calling on the Iranian people to stay united amid the United States and Israel’s efforts to undermine public trust and conduct “cognitive warfare.”[xviii] Mostafa Najafi, a political advisor close to former IRGC Commander and Expediency Discernment Council member Mohsen Rezaei, separately assessed on December 29 that Israel could exploit Iran's weakened position and attack Iran, and added that Israel could even convince the United States to attack Iran as well during Israeli Prime Minister Benjamin Netanyahu’s visit to the United States.[xix] Najafi noted that the Iranian regime needs to address external perceptions of internal unrest in Iran.[xx]

The Iranian regime’s attempts to address economic issues are unlikely to provide immediate relief to the economy, however. Pezeshkian replaced Iranian Central Bank Governor Mohammad Reza Farzin with former Economy Minister Abdol Nasser Hemmati on December 29, following pressure from “almost everyone in government,“ according to Najafi.[xxi] Hemmati previously served as Central Bank governor during US President Donald Trump’s first round of maximum pressure between 2019 and 2021, when inflation rates increased from around 40 percent to 45 percent and the rial‘s value more than halved.[xxii] Pezeshkian claimed that his budget involved a 20-point plan, which involved controlling energy consumption and relying on trade with regional partners to ensure people’s livelihoods, in an interview with the Supreme Leader’s official outlet on December 27.[xxiii] Pezeshkian held an emergency meeting with the government’s economic team at the Central Bank on December 29 to discuss foreign exchange, trade, and livelihood policies after Parliament’s budget oversight committee rejected his budget proposal.[xxiv] One hundred sixty-five out of 290 Iranian parliamentarians separately signed a letter to Pezeshkian, Parliament Speaker Mohammad Bagher Ghalibaf, and Judiciary Chief Gholam Hossein Mohseni Ejei on December 25, in which they expressed their concern over severe price and foreign exchange rate fluctuations.[xxv] The letter presented five solutions to remove all competitor currencies to the rial from transactions (such as gold, cryptocurrencies, and foreign currencies) to strengthen the rial.[xxvi] The Central Bank previously proposed and may have recently implemented other mechanisms, including exporting transactions to a secondary market to encourage exporters to return foreign currencies faster and increase the foreign currency reserve to help stabilize the foreign exchange market.[xxvii] These mechanisms mean that, in theory, the Central Bank does not need to rely as much on building foreign reserves to control the exchange rate and subsequently inflation.[xxviii] It remains uncertain whether any of these mechanisms would work in practice, as it would require public trust in the rial to stabilize inflation and the government’s handling of the economy, which is currently lacking.

Unspecified anti-government Alawite fighters took advantage of civilian protests over legitimate Alawite grievances to attack government security forces in coastal Syria on December 28. Prominent Alawite leader Ghazal Ghazal called for Alawites in Syria to protest on December 27 in response to Salafi-jihadi group Saraya Ansar al Sunnah’s December 26 attack on an Alawite Mosque in Homs City, which killed eight people.[xxix] Alawites organized protests in Latakia and Tartous provinces on December 28, demanding federalized governance, greater state protection for Alawites, an end to sectarian attacks, and the release of former Assad regime detainees arrested after the fall of the Assad regime in December 2024.[xxx] These demands are legitimate, but it is unclear to what degree anti-government actors deliberately organized and stoked them. The protests quickly became chaotic as pro-government counter-protestors and government forces became involved.[xxxi] Unspecified anti-government Alawite fighters, who were concealed among protestors, took advantage of this chaos and opened fire on General Security Service (GSS) forces at the Azhari Roundabout in Latakia City.[xxxii] The attack killed one GSS member.[xxxiii] Unspecified anti-government Alawite fighters, who were similarly concealed among protestors, also threw a grenade at GSS forces in Baniyas, Tartous Province, wounding two GSS members.[xxxiv] The Syrian Ministry of Defense (MoD) deployed armored units and military police to Tartous and Latakia cities in response to the attacks.[xxxv]

The unspecified attackers may have been Alawite insurgents who deliberately sought to trigger an aggressive government retaliation. One member of both the Men of Light (Saraya al Jawad) and the Coastal Shield Brigade infiltrated civilian protests in Latakia City on December 28, during which they threatened to attack security forces.[xxxvi] The Men of Light is an Assadist insurgent group that has conducted low-level attacks targeting government forces since August 2025 and is reportedly affiliated with former Assad regime special forces commander Suhail al Hassan.[xxxvii] The Coastal Shield Brigade is an Assadist insurgent group founded in February 2025 by Hassan and Miqdad al Fatiha, a former Assad regime Republican Guard commander.[xxxviii] The Men of Light reportedly graffiti-ed infamous Assad regime slogans, including “Assad or we burn the country,” during the protests in Latakia City on December 28, despite publicly denying their responsibility.[xxxix] Assadist insurgents previously ambushed government forces in March 2025, triggering widespread government atrocities against Alawite civilians.[xl] The insurgents may have sought to trigger similar reprisals amid the protests.

Assadist-style slogans at the protests and the attacks themselves suggest some limited support among the protesters for Alawite insurgent groups and fertile grounds for recruitment.  Alawite protestors in Jableh, Latakia Province, reportedly chanted ”with blood and with soul we defend you Ghazal,” which modifies an infamous pro-Assad chant “with blood and with soul we defend you Bashar.”[xli] The adoption of Assadist-style slogans among some Alawite protestors further indicates some support for an Assadist Alawite insurgency. Independent Syrian researcher Gregory Waters claimed that most Alawite civil society organizations rejected the December 28 protests due to their Assadist ties, but even small groups of insurgents could pose a threat to the new Syrian government.[xlii]

The Syrian government and Syrian Democratic Forces (SDF) may soon announce a formal military integration agreement, but the two sides retain their core disagreements over decentralization and will continue to debate this issue in the coming months.  An unspecified SDF source told Syrian media on December 25 that the SDF and the Syrian government may announce a US-brokered military agreement before December 30.[xliii] The agreement specifies the mechanisms under which the SDF and Kurdish internal security forces will integrate into the Syrian defense and interior ministries.[xliv] SDF Commander Mazloum Abdi was expected to travel to Damascus on December 29—almost certainly to meet with Syrian government officials and discuss or finalize the integration agreement—but “logistical and technical arrangements” delayed his visit.[xlv] Abdi’s delayed meeting with the Syrian government may impact any planned finalization or announcement of the military agreement under discussion.[xlvi] The Syrian government and the SDF have traded a proposal back and forth over the past two weeks that details the mechanisms of the SDF’s military integration into the Syrian state.[xlvii] Syria and Turkey had imposed a deadline of December 31, 2025, for the SDF to integrate into the state, but Western and Kurdish sources told Reuters on December 18 that an extension of the March 10 integration agreement’s December 31 deadline is probably imminent.[xlviii]

The SDF and the Syrian government will continue to negotiate over the type of authority that the Syrian government will wield over the currently autonomous northeastern Syrian region in the coming months, regardless of any momentum towards the SDF’s military integration into the Syrian state. The reported contents of the recent military integration proposal to the SDF still do not address core political disagreements between the transitional government and SDF, such as decentralization, Kurdish constitutional rights, and control of oil fields in northeast Syria, which have stalled integration talks since March 2025.[xlix] Abdi stated during an SDF advisory body meeting on December 25 that the ”constitutional issues” being discussed require more time for both parties to reach a solution, adding that decentralization must be incorporated within the Syrian constitution.[l] Neither the SDF nor the Syrian government has conceded its position or changed its views on the centralization of state power.

The new Iraqi Parliament elected Progress Party parliamentarian Haibat al Halbousi as parliament speaker on December 29.[li] Haibat al Halbousi is the cousin of former Parliament Speaker and Progress Party head Mohammad al Halbousi, which indicates that Mohammad al Halbousi likely negotiated a deal with Iranian-backed Iraqi actors to support Haibat’s election. Iraq’s Federal Supreme Court, which is aligned with the Iranian-backed Badr Organization and former Prime Minister and State of Law Coalition head Nouri al Maliki, removed Mohammad al Halbousi from his position as parliament speaker in 2023, ostensibly for “forgery.”[lii] The court removed Halbousi after he reportedly blocked a parliamentary vote that would have called for the expulsion of the US ambassador[liii]. The ruling was unconstitutional, and Halbousi said that unspecified parties sought to use the ruling to “sow divisions“ in society.[liv] Halbousi’s replacement, former First Deputy Speaker Mohsen al Mandalawi, supported the expulsion of US forces by Iranian-backed militias[lv] The militias then repeatedly blocked Halbousi’s preferred candidate from winning the speakership throughout early 2024 and escalated their efforts to expel US forces with Mandalawi’s support.[lvi] The timing of Halbousi’s removal in November 2023, combined with the militias‘ efforts to prevent the speakership from going to a Halbousi-backed candidate in the months following, strongly suggests that the militias orchestrated his removal. The assumption of the speakership by Halbousi ally indicates that Halbousi has cut a deal with the militias, though the specifics of that deal are unclear.

Haibat al Halbousi has served as a parliamentarian from Anbar Province since 2018 and the parliamentary Oil and Energy Committee Chairman since 2022.[lvii] The parliament speaker chairs parliamentary elections and, along with its two deputies, sets the agenda for parliament sessions.[lviii] The speakership is historically held by a Sunni.[lix] The Progress Party was the best-performing Sunni political party in the 2025 parliamentary elections.[lx] The Iraqi Parliament will now have until January 28, 2026, to elect an Iraqi president by a simple majority with a two-thirds quorum.[lxi] The Patriotic Union of Kurdistan and the Kurdistan Democratic Party (KDP) continue to negotiate which party will receive the presidency.[lxii]

Iranian-backed Iraqi actors will likely use Parliament’s election of an Iranian-backed Iraqi militia-linked deputy parliament speaker to further their control of the Iraqi Parliament. The Iraqi Parliament elected Sadiqoun parliamentarian and former Babil Province Governor Adnan Fayhan as the first deputy speaker and KDP parliamentarian Shakhwan Abdullah as the second deputy speaker on December 29.[lxiii] Sadiqoun is Iranian-backed Iraqi militia Asaib Ahl al Haq’s political bloc and won 27 seats in the recent elections.[lxiv] Fayhan helped plan Asaib Ahl al Haq’s 2007 attack on the Karbala Provincial Joint Coordination Council that killed multiple US soldiers.[lxv] The first deputy speaker can chair parliamentary sessions in the speaker’s absence and, along with the second deputy speaker, helps the speaker set the agenda for parliament sessions.[lxvi] Fayhan would also assume control of the speakership if the speaker was removed, as Halbousi was in November 2023.[lxvii]

Shia Coordination Framework-aligned Deputy Parliament Speaker Mohsen al Mandalawi demonstrated how the deputy speaker can use their position to meet the interests of Iranian-backed Iraqi actors, despite pushback from the parliament speaker, when Mandalawi attempted to move forward with the passage of the Popular Mobilization Authority Law in July 2025.[lxviii] The Shia Coordination Framework is a loose coalition of Shia political parties, some of which Iran backs. The Popular Mobilization Authority Law would likely increase Iran’s influence in the Iraqi political and security spheres by formalizing key structures of the Iranian-backed Popular Mobilization Forces (PMF).[lxix] CTP-ISW assessed in July 2025 that some Iraqi parliamentarians, including Mandalawi, may have threatened to remove Parliament Speaker Mahmoud al Mashhadani to pressure Mashhadani to place the Popular Mobilization Authority Law on the parliament agenda.[lxx] Mandalawi later chaired a session in early August 2025, after which Mashhadani accused Mandalawi of violating the parliamentary bylaws for chairing the session and called it ”invalid.”[lxxi] Mandalawi chaired this session as over 120 parliamentarians submitted a petition to place the Popular Mobilization Authority Law on the agenda for a vote.[lxxii] Mandalawi reportedly did not raise the law during the session that he chaired, but this instance demonstrates the deputy speaker’s ability to take action without the speaker’s oversight.[lxxiii] The Iraqi Parliament completed its first and second readings of the draft bill before Prime Minister Mohammad Shia al Sudani withdrew the bill in late August 2025, prior to a vote due to US pressure.[lxxiv] The next prime minister would need to submit the law to parliament again before parliament could vote on it.[lxxv] Asaib Ahl al Haq’s stated interest in the law’s passage, as well as the militia’s strategic aim to increase the power of Iranian-backed Iraqi actors, makes Fayhan’s control over parliament concerning to US interests in Iraq. [lxxvi]

Key Takeaways

• Iran’s Economic Conditions: Small-scale protests demanding that the Iranian government address the devaluation of the Iranian rial and high inflation rates have continued for the second consecutive day in Tehran and Hamadan City, western Iran, on December 29 amid a rapid collapse of the Iranian currency since November 2025. Current economic-related protests come as the Iranian regime is deliberating on Iran’s 2026/27 Budget, which is set to increase taxes to relieve Iran’s budget deficit as state oil revenue decreases, but will put additional economic pressure on the Iranian people.
• Anti-Government Insurgents in Syria: Unspecified anti-government Alawite fighters took advantage of civilian protests over legitimate Alawite grievances to attack government security forces in coastal Syria on December 28. The unspecified attackers may have been Alawite insurgents who deliberately sought to trigger an aggressive government retaliation. Assadist-style slogans at the protests and the attacks themselves suggest nascent support for Alawite insurgent groups and fertile grounds for recruitment.
• SDF Integration: The Syrian government and Syrian Democratic Forces may soon announce a formal military integration agreement, but the two sides retain their core disagreements over decentralization and will continue to debate this issue in the coming months.
• Iraqi Government Formation: The new Iraqi Parliament elected Progress Party parliamentarian Haibat al Halbousi as parliament speaker on December 29. Haibat al Halbousi is the cousin of former Parliament Speaker and Progress Party head Mohammad al Halbousi, which indicates that Mohammad al Halbousi likely negotiated a deal with Iranian-backed Iraqi actors to support Haibat’s election. Iranian-backed Iraqi actors will likely use Parliament’s election of an Iranian-backed Iraqi militia-linked deputy parliament speaker to further their control of the Iraqi Parliament.

Iran

Russia is continuing to support the development of the Iranian space program. Russia launched three indigenous Iranian remote sensing satellites named Paya, Zafar 2, and Kowsar into orbit on December 28 using the Russian Soyuz space launch vehicle.[lxxvii] The Paya satellite is designed to deliver imagery with a resolution of around five meters in black and white and 10 meters in color.[lxxviii] The Kowsar satellite is the second model of the previously launched Iranian Kowsar satellite, which Russia launched into space in November 2024.[lxxix] Russia has launched five Iranian-made satellites into orbit since 2022, including the Khayyam satellite in August 2022, the Pars-1 satellite in February 2024, the Kowsar and Hodhod satellites in November 2024, and the Nahid-2 satellite in July 2025.[lxxx] IRGC-affiliated media previously reported in July 2020 that the IRGC uses satellites to collect intelligence on US military positions in the region, underscoring the importance of satellites to Iran’s military forces.[lxxxi] Five- and ten-meter resolution imagery is very low resolution compared to commercially available 0.5m or 3m resolution imagery. Western media outlets, for example, commonly publish full-color satellite imagery at 0.5m resolution.

Iranian Armed Forces General Staff (AFGS)-controlled Defa Press warned on December 28 that Iran could use its “Hadid 110” drones to attack US military bases in the region, possibly to try to deter US and Israeli military action against Iran.[lxxxii] Iran showcased the Hadid 110 drone during the 2025 Sahand counterterrorism exercise in early December 2025.[lxxxiii] The Hadid 110 is a fixed-wing, jet-powered, one-way drone that can fly up to 510 kilometers per hour at an altitude of 9 kilometers and can reach targets around 350 kilometers away.[lxxxiv] It is the fastest Iranian drone (though it prioritizes speed over durability) and maintains a low radar visibility.[lxxxv] Defa Press stated that Iran could use the Hadid 110 to attack US military bases during a “full-scale conflict” between Iran and the United States.[lxxxvi] Defa Press may have published this article in response to reports that Israeli Prime Minister Benjamin Netanyahu would brief US President Donald Trump on options for the United States to “join or assist” an Israeli military operation against Iran’s ballistic missile program during his December 29 meeting with Trump.[lxxxvii] Trump responded on December 29 to a question about whether he would allow Netanyahu to strike Iran again, stating, “for ballistic missiles, yes.”[lxxxviii] Defa Press also published the threat to attack US military bases in English, which suggests that it was also intended for an English-speaking audience.[lxxxix]  

Iraq

The Iraqi Federal Supreme Court ruled on December 24 that the prime minister does not have the authority to “form investigative committees” or directly discipline any "employees of ministries and entities not affiliated with a ministry.”[xc] The prime minister must instead ask the “relevant minister or the head of the non-ministerial entity” to investigate employees for alleged job-related violations.[xci] The court is Iraq’s independent judicial court, but the court has previously issued rulings that have benefited Iranian-backed Iraqi actors, and Iranian-backed Iraqi actors have long exerted influence within it.[xcii] The court’s ruling follows a series of Iraqi prime ministerial investigations that targeted ruling Iraqi political parties and Iranian-backed Iraqi actors. Prime Minister Mohammad Shia al Sudani also formed a high-level committee in July 2025 to investigate a Kataib Hezbollah-linked PMF operational command head and fired two Kataib Hezbollah commanders following the July 2025 clashes between Kataib Hezbollah and the Iraqi Federal Police.[xcv] The PMF is an Iraqi state security service comprised of several, Iran-backed Iraqi militias, many of which report to Iran instead of the Iraqi prime minister.[xcvi]

Syria

Islamic State in Iraq and al Sham (ISIS) fighters are continuing to attack Syrian transitional government personnel in northern Syria after Syria joined the Global Coalition to Defeat ISIS in November 2025. ISIS fighters fired small arms targeting a Syrian Interior Ministry Customs vehicle along the Aleppo-Raqqa highway near Kuweires, east of Aleppo City, on December 26.[xcvii] The attack wounded three customs officers.[xcviii] ISIS has increased the rate and geographic range of its attacks in government-controlled territory since Syria joined the Global Coalition to Defeat ISIS on November 10.[xcix] ISIS has claimed at least eight attacks since November 10 in which ISIS fighters have targeted Syrian army soldiers, Interior Ministry officers, and one judicial official.[c] A BBC Salafi-jihadi expert noted on December 13 that high-profile Islamic State (IS) supporters have encouraged ISIS sympathizers to conduct attacks against the Syrian transitional government “whenever and wherever possible” in the weeks since Syria joined the Global Coalition, which may be motivating some of these attacks.[ci]

Arabian Peninsula

Saudi Arabia has continued to pressure the United Arab Emirates (UAE)–backed Southern Transitional Council (STC) to de-escalate in eastern Yemen.[cii] Saudi Defense Minister Khalid bin Salman issued a statement on December 27, calling on the STC to ”end the escalation,” withdraw its forces from camps in Hadramawt and al Mahra governorates, and “hand [the camps] over peacefully” to the Saudi-backed National Shield Forces (NSF) and local authorities under Saudi-Emirati mediation.[ciii] STC officials rejected Khalid bin Salman's demand for de-escalation and STC withdrawal in a statement on December 28.[civ] Saudi Arabia has also continued military activities to warn the STC against continuing their efforts to control eastern Yemen. Khalid bin Salman’s call came a day after Saudi aircraft struck STC positions near Ghayl bin Yamin District, Hadramawt Governorate, on December 26.[cv] A Yemeni journalist reported on December 28 that Saudi aircraft dropped flares over Seiyun Airport.[cvi] The journalist added that approximately 12 Saudi-backed NSF brigades were deployed to al Abr and al Rowik in Hadramawt Governorate, alongside roughly five brigades of newly-established Yemen Emergency Forces operating under Saudi control.[cvii]
Palestinian Territories and Lebanon

Nothing significant to report.